Innovation As The Key To Business Success

M. Isi Eromosele

In order to not only compete and grow but to survive in a global economy, businesses must innovate. To date innovation has been approached in a piecemeal fashion often linked solely to the new product development process.

Innovation is often about small, incremental changes to products, services and processes. It involves all managers in every department of a company, from Finance to Customer Services. It should be planned and managed as a core business process covering all parts of a business. It needs to be integrated into the business at both strategic and operational levels.

Innovation and Planning

As with all other core business processes innovation needs to be linked to strategy and the business planning process.  Innovation separate to business strategy runs the risk of diverting key resources and damaging the focus of an organization. This syndrome must be avoided at all costs.  Innovation activities must be driven by strategy and current business imperatives.

The extent and type of innovation should be determined by current business performance and future expectations and by an organization’s tolerance to risk.

How far innovation is integrated with a business’ strategy is also dependant upon a business’ appetite for risk and its risk profile. Differing types of innovation strategies and projects have different risks.

A balanced portfolio of innovation projects should be adopted when assessing the risk factors involved and the numbers of ideas or innovations being managed at any one time.

The Innovation Pipeline

Once innovation, as a concept, has been accepted at a strategic level, the practical implications of having an integrated innovation process or system have to be addressed. An effective starting point is to understand where innovations originate from and how they can be collated and screened.

Innovations and ideas can come from any part of an organization. It is not the preserve of the R&D department or Marketing. Nor is it merely limited to an employee or customer suggestion scheme.

The sources of innovation are many and varied but they need to be collated, coordinated and managed as a source of valuable information and are core to the future of an innovative business.

A successful innovation culture embraces all aspects of a business and should be managed as effectively and efficiently as any other core business process. To that end, successful innovative companies operate an Innovation Hub where all ideas and innovations are collated and coordinated.

Creative processes and analysis can be used to stimulate new ideas in four basic areas:

• Business Innovation – new business or supply chain models, for example
• Product or service Innovation  –  new or modified products or ways of providing a service
• Market Innovation  –  opening a new market or creating a new customer base
• Process Innovation – improving or changing internal processes

Ideas should be effectively screened and bad ideas killed off quickly but sympathetically. The number and type of ideas should be determined by the performance gap and available resources. 

Many organizations find that an effective screening or filtering process prevents innovation overload, whereby a company is almost paralyzed by the sheer volume of innovations and ideas generated from a multiplicity of sources. If new ideas and innovations are to make a difference, they must satisfy five basic criteria:

Value - does the idea deliver tangible benefits to your organization? This question helps eliminate those ideas and innovations that are good in principle but add little or no value

to the bottom line, now or in the future.  Tangible means that proponents of the idea or innovation will have to estimate or calculate the specific benefits that will arise.

Suitable - is it consistent with your organization’s strategy and the current market environment? This helps eliminate those ideas that are potential distractions that could move the business needlessly away from its core business focus.

If an idea or innovation is not suitable it still may have value, but in other ways - such as outsourcing it under license to third parties or even spinning it off as a separate product within a separate business entity.

Acceptable - will all stakeholders support it? Often innovations fail in large companies because of the not invented here syndrome. It is crucial that proponents of an idea or innovation spend time and effort on selling the idea internally and gauging

the level of support  for it.

This is often overlooked and failures are often attributed to ‘office politics’. Stakeholders are an internal barrier that must be negotiated as if they were a formal process.

Feasible - are there sufficient resources and time? Can the innovation be managed within existing budgets or will additional funding be required?  Do new skills need to be

acquired to implement this idea effectively? The answers to these questions will affect the timeline for implementation and the potential return on investment calculation. It is often seen as a reality check.

Enduring - will the idea deliver value in both the long and short term? If a new idea or innovation is to be truly strategic, will it survive the rigors of time? Is the long term gain worth the short term pain of bringing a new idea to market?  Again this highlights the return on the investment to be made.

The Innovation Process

Innovation should be built into business routines at three distinct levels - at the Annual Business Planning process, through structured themed Quarterly Innovation Workshops, and ad hoc day to day activities. 

Some of the routines are ‘proactive’ by nature - a conscious focus on bringing ideas and concepts forward into the innovation process, such as ABP meetings and QIWs. Some routines are passive or reactive, such as creating a culture of innovation where day to day activities and management seek to enable innovations to flourish.

In all cases, ideas and innovations should be driven by market, customer or competitor  insights and progress reviewed on a monthly basis.  A robust project management process is often a prerequisite for effective innovative implementation and communication.

There are a few critical success factors when installing and running an innovation process within your organization:

• A focus on opportunities of high value - and lesser ideas are discarded quickly. This is done through a robust and widely known filtering process using the V-SAFE process, or similar. Active commitment of top management through visible leadership and use of the process by senior management. As soon as an informal process to fast track ideas from senior management is used the innovation process breaks down.
• Build techniques into business processes - the most successful innovation cultures are those where the core innovation process is as natural as all other business processes such as budgeting and planning. Easy to state, difficult to do!
• Develop innovation as a core skill - in all staff and especially in managers.  It can be done and managers can be encouraged to put forward their and their staff’s ideas. Thinking innovatively is a skill that can be acquired.
• Tools to support the application of concepts - using the Internet and some tracking software, ideas can be tracked and innovations planned. You would not think of running any other core business process without a tool or system of some sort, so why should innovation be different?
• Reward people for sharing ideas & knowledge - and this does not just mean a cash bonus. Performance can be improved through good management and a reward system that recognizes group effort and sharing ideas rather than just the individual.

Innovation and People

Research has indicated that one of the most important factors in installing an innovation culture within any company is having leaders and teams with ability and commitment. Senior managers need to understand the strategic direction and how innovation can help. They also need to be able to motivate others.

Creating a culture of continuous innovation requires leadership and commitment from the senior management team.. This is imperative, a necessary prerequisite for success. It also requires agents of innovation and innovation teams across the organization, champions who will assist project managers with the implementation and tracking of ideas, innovations and changes.

If there are no boundaries and structure to the innovation process, staff  confidence is often affected. If there is no method then the chance of success is reduced. Organizations that truly invest in their people and understand the value of their ideas ensure that facilities, equipment, time and resources are organized to help foster ideas and innovations.

This might be, for example, using facilitators to help engender innovation in business meetings or setting aside quiet areas for people to think through ideas or even having informal coffee breaks where people in different departments who would not normally meet or socialize get together for a quick break and to chat.

Innovation and Performance

Creating an innovation process and installing an innovation culture must be managed and measured on an ongoing basis. Monthly and weekly meetings should focus on the progress and performance of both new ideas and the implementation projects.

Issues should have a process by which they are escalated and associated risks managed where appropriate. The performance of the innovation process and the issues raised should drive and inform the next planning process and review of strategy. Performance has to be linked to strategy and measures and key performance indicators (KPIs) set.

The frequency of performance measurement is often dependant upon how critical the innovations are to the overall business performance of your organization.

Performance measurement is intimately linked to the innovation platform used by the organization. It should give managers real time information on how innovations are progressing and their performance against the selected KPIs.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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